H.R. 5410

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5410 Introduced in House (IH)]

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118th CONGRESS
1st Session
H. R. 5410

To direct the Secretary of the Treasury to develop and pilot digital 
dollar technologies that replicate the privacy-respecting features of 
physical cash.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

September 12, 2023

Mr. Lynch (for himself, Ms. Pressley, Ms. Tlaib, and Mr. Garcia of 
Illinois) introduced the following bill; which was referred to the 
Committee on Financial Services

_______________________________________________________________________

A BILL

To direct the Secretary of the Treasury to develop and pilot digital 
dollar technologies that replicate the privacy-respecting features of 
physical cash.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Electronic Currency And Secure 
Hardware Act'' or the ``ECASH Act''.

SEC. 2. DEFINITIONS.

In this Act:
(1) ECIP.--The term ``ECIP'' means the Electronic Currency 
Innovation Program established under section 4.
(2) Secretary.--The term ``Secretary'' means the Secretary 
of the Treasury.

SEC. 3. ELECTRONIC DOLLAR.

(a) Establishment.--The Secretary of the Treasury shall promote and 
facilitate the development and deployment of an electronic version of 
the United States dollar for use by the general public that replicates 
and preserves the privacy, anonymity-respecting, and minimal 
transactional data-generating properties of physical currency 
instruments such as coins and notes to the greatest extent technically 
and practically possible.
(b) Electronic Dollar Requirements.--The electronic dollar 
described under subsection (a) shall be--
(1) known as ``e-cash'';
(2) payable to bearer;
(3) legal tender, as described in section 5103 of title 31, 
United States Code;
(4) an obligation of the United States, as described in 
section 8 of title 18, United States Code;
(5) created and issued into circulation by the Department 
of the Treasury, in such quantities, denominations, and 
technical forms as the Secretary, in the Secretary's 
discretion, determines to be appropriate;
(6) distributed directly to, and capable of being owned, 
held, and used directly by, the general public;
(7) capable of instantaneous, final, direct, peer-to-peer, 
offline transactions using secured hardware devices that do not 
involve or require subsequent or final settlement on or via a 
common or distributed ledger, or any other additional approval 
or validation by the United States Government or any other 
third-party payments processing intermediary;
(8) inter-operable with all existing financial institution 
and payment provider systems and generally accepted payments 
standards and network protocols, as well as other public 
payments programs, including the U.S. Debit Card and Digital 
Pay Program and the EagleCash card program of the Department of 
the Treasury and any other digital dollar or public banking 
products;
(9) classified and regulated in a manner similar to 
physical currency for the purposes of anti-money laundering, 
know-your-customer, counter-terrorism, and transaction 
reporting laws, and thus not subject to third-party exemptions 
to a reasonable expectation of privacy;
(10) designed, issued, and administered to be consistent 
with--
(A) the statutory objectives articulated in 
subsection (c), as well as any rules, standards, and 
criteria enacted to further those objectives;
(B) the consumer protections articulated in 
subsection (d), as well as any rules, standards, and 
criteria enacted to further those protections; and
(C) any and all other technical and policy criteria 
established by this Act or by the Secretary or Director 
under the authority granted to them under this Act;
(11) distinguishable from other forms of electronic 
currency issued by or on behalf of the United States 
Government, including any such forms that--
(A) are issued by a department, branch, agency, or 
instrumentality of the United States Government other 
than the Department of the Treasury, including such 
forms of ``central bank digital currency'' as may be 
issued by the Board of Governors of the Federal Reserve 
System or its designated agents;
(B) are legally classified as an account balance or 
any other kind of financial instrument not payable to 
bearer or that otherwise require identification and 
account or device registration to hold, access, or use;
(C) are not distributed directly to, or otherwise 
capable of being owned, held, or used directly by, the 
general public; or
(D) fail to replicate and preserve the privacy, 
anonymity-respecting, and minimal transactional data-
generating properties of physical currency instruments 
such as coins and paper notes to the greatest extent 
technically and practically possible; and
(12) not included in calculations of public debt subject to 
limit under section 3101 of title 31, United States Code.
(c) Statutory Objectives.--The Secretary shall promulgate and 
enforce rules, standards, and criteria pertaining to the development 
and implementation of e-cash instruments, devices, technologies, 
platforms, and supporting and enabling infrastructure, as well as the 
issuance, dissemination, circulation, storage, and use of e-cash 
balances, including use in transactions, in such a manner and to such 
an extent as the Secretary determines to be necessary or appropriate to 
achieve the objectives of this Act, subject to the following 
conditions:
(1) Ownership.--The Secretary shall require that any and 
all e-cash instruments are capable of being owned, held, and 
used directly by the general public via widely available 
hardware devices, without the necessary involvement of third-
party custodial or payment processing intermediaries.
(2) Privacy.--The Secretary shall require that any hardware 
device authorized to hold or otherwise facilitate transactions 
involving e-cash shall be secured locally via cryptographic 
encryption and other appropriate technologies, and shall not 
contain or be subject to any surveillance, personal 
identification or transactional data-gathering, or censorship-
enabling backdoor features.
(3) Universality.--The Secretary shall prioritize wherever 
possible technologies, practices, and programs that promote 
universal access and usability, particularly for--
(A) individuals with disabilities, including visual 
impairment;
(B) low-income individuals; and
(C) communities with limited access to the internet 
or telecommunications networks.
(4) Inclusion.--The Secretary shall take into consideration 
the unique needs and circumstances of marginalized communities 
and populations that have historically been excluded from or 
otherwise prevented from taking full advantage of traditional 
and current financial institutions and payment services.
(5) Transparency.--The Secretary shall seek out and 
prioritize wherever practically feasible the use of hardware 
and software technologies issued under open-source licenses, 
and shall further require that all publicly funded research and 
technology be released under a suitable open-source license and 
made available for study and review by the scientific community 
and the general public, except to the extent that doing so 
would undermine or impair the security and integrity of e-cash 
devices or instruments.
(d) Consumer Protections.--
(1) Fees.--The Government may charge reasonable prices when 
selling e-cash-compatible hardware (henceforth ``e-cash 
devices'') directly to the public, provided such prices are 
proportionate to, and not unduly in excess of, actual 
production and administration costs, but may in no instance 
impose fees or other charges for holding, receiving, sending, 
or otherwise transacting with e-cash balances using such 
devices.
(2) Solicited issuance of e-cash hardware devices.--The 
Government or an authorized e-cash distributor may issue an e-
cash device to a member of the public only in response to an 
oral or written request for such device.
(3) Solicited issuance of e-cash balances.--The Government 
or an authorized e-cash distributor may issue e-cash 
instruments to a user only in response to an oral or written 
request to receive funds in the form of e-cash, and any such 
requested funds shall be capable of being--
(A) received in the form of an increase in the 
available balance of an existing e-cash device or as a 
balance on a newly issued e-cash device; and
(B) paid for, to the extent such instruments shall 
be paid for, through delivery of physical currency or 
demand deposits at an interoperable exchange terminal.
(4) Disclosures by e-cash distributors.--
(A) In general.--Disclosures by the United States 
Government and any third-party authorized to distribute 
e-cash devices or balances regarding usage, fees, 
interoperability, security, privacy, data collection, 
error resolution, and any other terms considered 
relevant by the Bureau of Consumer Financial Protection 
shall be clear and readily understandable, in writing, 
and in a form the e-cash instrument bearer can 
reasonably maintain.
(B) Form of disclosures.--Disclosures described 
under subparagraph (A) may be provided to the consumer 
in offline electronic form, subject to compliance with 
the consumer-consent and other applicable provisions of 
the Electronic Signatures in Global and National 
Commerce Act (15 U.S.C. 7001 et seq.).
(5) Liability of issuers for unauthorized transfers.--
Neither the issuing entity nor any other Government agencies or 
approved e-cash distributors shall be held liable for 
unauthorized transfer of e-cash balances, so long as the 
appropriate disclosures and protections described in this Act 
are made.
(6) Fees by merchants.--It shall be unlawful for the United 
States Government, authorized e-cash distributors, or any other 
person to impose a service fee or an interchange fee, or other 
processing fee or surcharge, for the use of e-cash in payments 
or purchases.
(7) Bankruptcy.--E-cash instruments and balances shall be 
considered exempt property equivalent to physical currency for 
the purposes of Chapter 7 Bankruptcy proceedings.
(8) Transactional reporting.--Under no circumstance, 
regardless of the particular technology involved, shall any 
transaction data generated by e-cash payments be collected, 
monitored, or retained by the United States Government, an 
authorized e-cash distributor, or any other counterparty except 
via the exemptions provided by this Act.
(9) Preemption of inconsistent state laws.--State consumer 
laws are pre-empted unless the Director of the Bureau of 
Consumer Financial Protection determines, upon the Director's 
own motion or upon the request of a State government, but 
ultimately in the Director's sole discretion, that a State's 
consumer protection laws are not pre-empted.
(e) Requirement To Accept E-Cash.--
(1) Federal government.--The Federal Government shall--
(A) accept e-cash for any payment to the Federal 
Government, including payments for taxes, fines, and 
fees; and
(B) upon request, provide any Federal Government 
benefit in the form of e-cash.
(2) Products and services.--Any person selling products or 
services that accepts physical currency as a form of payment 
shall also accept e-cash as a form of payment to the extent it 
is practically feasible and reasonable to do so.
(f) Illicit Flows.--
(1) Presumption of legitimate use.--Under no condition 
shall the acquisition, possession, or use of e-cash devices, 
instruments, and balances under the parameters established by 
this Act be treated as prima facie or intrinsic evidence of 
criminal activity or intent, nor be established as a predicate 
offense or factor in crimes not specified in or under the 
authority established by this Act.
(2) Including under the bank secrecy act.--
(A) In general.--Section 5312(a)(3) of title 31, 
United States Code, is amended--
(i) in subparagraph (C), by striking 
``and'' at the end;
(ii) by redesignating subparagraph (D) as 
subparagraph (E);
(iii) by inserting after subparagraph (C) 
the following:
``(D) e-cash, as defined under section 3 of the 
ECASH Act; and''; and
(iv) in subparagraph (E), as so 
redesignated, by striking ``subparagraph (A), 
(B), or (C)'' and inserting ``subparagraph (A), 
(B), (C), or (D)''.
(B) Amendments to dollar thresholds.--At any time, 
the Director of ECIP may increase the value thresholds 
applicable to e-cash for any reporting requirement 
under subchapter II of chapter 53 of title 31, United 
States Code, but may at no time decrease such value 
thresholds.
(g) Systemic Liquidity.--The Board of Governors of the Federal 
Reserve System shall take appropriate measures to ensure that the 
implementation and adoption of e-cash does not disrupt or substantially 
impact the general availability or cost of liquidity for depository 
institutions, credit unions, or community development financial 
institutions, or their capacity to extend credit and other financial 
services to underserved populations, as described under the Community 
Reinvestment Act of 1977, and any other applicable Federal and State 
laws, however such measures may in no way impair, restrict, or 
otherwise limit the ability of the public to access, hold, and use e-
cash.

SEC. 4. ELECTRONIC CURRENCY INNOVATION PROGRAM.

(a) In General.--The Secretary shall establish the Electronic 
Currency Innovation Program to direct, oversee, coordinate, and 
harmonize the development, implementation, maintenance, and regulation 
of e-cash instruments, devices, technologies, platforms, and supporting 
and enabling infrastructure in accordance with the technical and policy 
criteria established by this Act.
(b) Director.--
(1) Appointment.--
(A) In general.--The head of the ECIP shall be the 
Director, who shall be appointed by the President, by 
and with the advice and consent of the Senate.
(B) Term.--The term of the Director is 5 years.
(C) Removal.--The President may remove the Director 
from office. On removal, the President shall send a 
message to the Senate giving the reasons for removal.
(D) Interim director.--When a Director has not yet 
been confirmed or appointed, the Secretary may, subject 
to the consent of the President, appoint an Interim 
Director, who shall enjoy the full powers and 
privileges of the Director as established under this 
Act until such time as a permanent Director is 
confirmed and appointed. In the event neither a 
Director or Interim Director is appointed, all 
responsibilities and duties assigned to the Director 
under this Act shall be assumed by the Secretary.
(2) Duties and powers.--The duties and powers of the 
Director are as follows:
(A) Promote innovation in, and ensure the 
successful implementation and widespread adoption of, 
e-cash instruments, devices, technologies, platforms, 
and supporting and enabling infrastructure in 
accordance with this Act, by--
(i) directing, conducting, sponsoring, and 
publishing research;
(ii) generating, collecting, analyzing, and 
publishing data;
(iii) acquiring, developing, disseminating, 
and sharing open-access technologies and 
technical knowledge;
(iv) developing and administering e-cash 
pilot programs, both individually and in 
partnership with other actors and entities that 
the Secretary determines appropriate;
(v) promulgating, and enforcing rules, 
objectives, standards, and criteria pertaining 
to the development and implementation of e-cash 
instruments, devices, technologies, platforms, 
and supporting and enabling infrastructure, as 
well as the issuance, dissemination, 
circulation, storage, and use of e-cash, 
including its use in transactions;
(vi) coordinating with other actors, 
including other departments, branches, 
agencies, and instrumentalities of the United 
States Government, as well as State, local, and 
foreign governments and international 
regulatory bodies, in furtherance of the 
general goals of this Act; and
(vii) developing and disseminating public 
educational materials and conducting public 
educational campaigns to foster awareness and 
understanding of e-cash and its economic and 
social significance in the broader monetary 
system.
(B) Such other duties and powers as the Secretary 
may delegate or prescribe.
(c) Staff, Equipment, and Facilities.--The Director shall be 
authorized to hire staff, purchase equipment, and rent or acquire 
facilities as the Director determines to be appropriate to achieve the 
goals and objectives established under this Act, subject to the 
approval of the Secretary.
(d) Pilot Programs.--
(1) Establishment.--
(A) In general.--Not later than 90 days after the 
enactment of this Act, the Director shall initiate a 
two-phase e-cash pilot program in anticipation of 
general deployment of e-cash to the public not later 
than forty-eight months after the date of enactment of 
this Act.
(B) Phase 1.--Phase 1 of the pilot program shall 
consist of not less than three distinct pilots (in this 
section referred to as ``Proof-of-Concept Pilots''), 
each of which shall launch no later than 180 days after 
the date of enactment of this Act, and run for no 
longer than 360 days thereafter.
(C) Phase 2.--Phase 2 of the pilot program shall 
consist of at least one large-scale deployment to a 
segment of the public (in this section referred to as 
``Field Test Pilots''), which shall launch no later 
than 2 years after the enactment of this Act, and run 
for no longer than 2 years thereafter.
(D) Extension of timelines for pilot programs.--The 
timelines for the implementation of the two phases of 
the e-cash pilot program described in this paragraph 
may be extended upon a determination by the Director 
that such an extension is necessary to ensure the 
security and integrity of the technologies to be 
piloted in the program.
(2) Administration.--
(A) In general.--The pilot programs shall be 
administered by the Director, in coordination with the 
Digital Dollar Council, and subject to the ongoing 
oversight and review of the Monetary Privacy Board.
(B) Proof-of-concept pilots.--Proof-of-Concept 
Pilots may be conducted--
(i) in partnership with one or more 
universities, non-profit entities, insured 
financial institutions, non-bank payment 
providers aimed at promoting financial 
inclusion, technology-focused financial firms 
and companies, financial technology companies, 
or foreign central banks; and
(ii) through, or in partnership with, any 
existing Federal, State, or local government 
fund disbursement and payments program, 
including those that rely on the U.S. Debit 
Card and Digital Pay Program, the EagleCash 
Card program, or any other payments technology 
offered by or in partnership with the Bureau of 
the Fiscal Service of the Department of the 
Treasury.
(C) Field test pilots.--Field Test Pilots may be 
conducted in partnership with any entity capable of 
partnering for a Proof-of-Concept Pilot, as well as 
other departments, branches, agencies, and 
instrumentalities of the United States Government, or 
State, local, and foreign governments and international 
regulatory bodies.
(3) Objectives.--The objectives of the pilot programs are 
to test the viability and capacity of various forms of e-cash 
technologies to--
(A) preserve the privacy, anonymity-respecting, and 
minimal transactional data-generating properties of 
physical currency instruments such as coins and notes 
to the greatest extent technically and practically 
possible;
(B) enforce total balance and transactional 
activity limits on a per-device basis without rendering 
such devices vulnerable to surveillance or censorship 
by third parties including the United States 
Government;
(C) deploy rapidly, securely, and efficiently on a 
mass scale; and
(D) maintain ease of use and interoperability with 
existing financial institution and payment provider 
systems, as well as any other digital dollar products.
(4) Parameters and constraints.--
(A) All technologies selected for Proof-of-Concept 
Pilots and Field Test Pilots shall be--
(i) designed as bearer instruments;
(ii) capable of instantaneous, final, 
direct, peer-to-peer, offline transactions; and
(iii) capable of being distributed directly 
to, and owned, held, and used directly by, the 
general public.
(B) At least two technologies selected for Proof-
of-Concept Pilots shall be based on secured hardware-
based architectures for the purposes of creation, 
distribution, holding, and payment that do not involve 
any common or distributed ledger.
(C) At least one technology selected for Proof-of-
Concept Pilots shall include a stored-value or pin card 
option for storage and payment of e-cash.
(D) At least one technology selected for Proof-of-
Concept Pilots shall include a cell phone or SIM card 
option for storage and payment of e-cash.
(E) All technologies selected for Field Test Pilots 
shall have or at a minimum be capable of incorporating 
stored-value card functionality.
(5) Special tender authority.--In order to facilitate and 
promote the effectiveness of the pilot programs, the Secretary 
may grant special recognition of prototypical e-cash 
instruments issued under a pilot program as legal tender, and 
direct the Board of Governors of the Federal Reserve System, 
other departments, branches, agencies, and instrumentalities of 
the United States Government, any other federally regulated 
financial institution to accept such prototypical e-cash 
instruments in settlement of outstanding obligations on an at-
par basis.
(6) Reporting.--Not later than 180 days after the date on 
which each phase of the pilot programs terminates, the 
Secretary shall submit to Congress a report regarding that 
phase of the pilot programs, which shall--
(A) include--
(i) a description of which elements of the 
pilot programs were successful and which were 
unsuccessful;
(ii) recommendations regarding legislative 
changes to the pilot programs and related 
authority under this Act and elsewhere; and
(iii) recommendations for additional pilots 
and revisions to the pilot program; and
(B) make the nonsensitive analytical data available 
for public review and comment.

SEC. 5. DIGITAL DOLLAR COUNCIL.

(a) In General.--The Secretary shall establish the Digital Dollar 
Council (in this section referred to as ``the Council'') to coordinate 
the Secretary's ECIP-related activities with the efforts of other 
bureaus of the Department of the Treasury and other departments, 
branches, agencies, and instrumentalities of the United States 
Government, including the Board of Governors of the Federal Reserve 
System and the United States Postal Service.
(b) Membership.--The Council shall be comprised of the Secretary, 
the Director of ECIP, the Chairman of the Board of Governors of the 
Federal Reserve System, the Postmaster General of the United States 
Postal Service, the Director of the Office of Science and Technology 
Policy, the Chief Technology Officer of the United States, and the 
Director of the National Institute of Standards and Technology, and any 
other Federal employees or representatives of Federal agencies as the 
Secretary, in the Secretary's discretion, determines to be appropriate.
(c) Leadership.--The head of the Council shall be the Secretary, 
however, the Secretary may, at the Secretary's discretion, delegate 
administrative and decision-making responsibility to the Director.
(d) Authority.--The Council shall have the power to redeploy 
personnel and resources among the various participating agencies, as 
well as establish or amend any rules and regulations promulgated by any 
participating agencies to the extent the Council determines such 
actions to be necessary to achieve the goals and objectives established 
under this Act.
(e) Jurisdiction.--Nothing in this section shall be construed as 
taking away any powers heretofore or otherwise vested by law in the 
Secretary, and wherever any power vested in the Council appears to 
conflict with the powers vested in the Secretary under this Act, such 
powers shall be exercised subject to the supervision and control of the 
Secretary.
(f) Joint Report.--Beginning 180 days after the date of enactment 
of this Act, and each 180 days thereafter, the Council and the National 
Institute for Standards and Technology shall issue a joint report to 
the Congress detailing a plan to achieve full interoperability with 
existing public and private payments systems within 1 year.

SEC. 6. MONETARY PRIVACY BOARD.

(a) In General.--There is established a Monetary Privacy Board (in 
this section referred to as ``the Board'').
(b) Membership.--
(1) In general.--The Board shall be comprised of 5 members, 
appointed by the President, by and with the advice and consent 
of the Senate.
(2) Chair.--The President shall appoint one member of the 
Board as the Chair of the Board. Except as provided under 
subsections (c) and (e), the Chair shall--
(A) make all decisions of the Board with respect to 
staffing, hiring, and budget allocation; and
(B) conduct the meetings of the Board.
(3) Term.--The term of each member of the Board is 3 years.
(4) Removal.--The President may remove a member of the 
Board from office. On removal, the President shall send a 
message to the Senate giving the reasons for removal.
(5) Interim members.--When a vacancy on the Board remains 
open for more than three months, the President may appoint an 
interim member to fill that vacancy. Interim members shall 
enjoy the full powers and privileges of a full member until 
such time as a permanent member is appointed and confirmed.
(c) Member Offices.--Each member of the Board shall be entitled to 
spend 5 percent of the budget of the Board on the personal office and 
staff of the member.
(d) Duties and Powers.--
(1) In general.--The Board shall review the actions and 
decisions of the Secretary, the Director of ECIP, and ECIP 
generally on an ongoing basis to evaluate the extent to which 
their decisions are consistent with their statutory 
responsibilities under this Act, and more broadly, a general 
commitment to preserving the privacy interests of individuals 
and actors that use e-cash and other forms of digital dollar 
technologies issued or administered by the United States 
Government.
(2) Semi-annual report.--The Board shall issue a report to 
Congress no less than twice per year--
(A) detailing its findings from its ongoing review 
process;
(B) providing an assessment of the general state of 
monetary privacy in the United States; and
(C) offering recommendations for how to better 
protect civil liberties and individual privacy 
interests through legislative and regulatory reform.
(3) Interim reports.--The Board, or one or more members 
thereof, may publish interim reports or any other communication 
at any time at their discretion, provided such reports and 
communications are clearly distinguished from the reports 
required under paragraph (2), and the particular authors and 
co-signatories are clearly indicated.
(e) Funding Authority.--The Board shall submit an annual budget 
request to the Secretary, and the Secretary shall transfer the 
requested amount to the Board, using the authorities provided under 
section 7(b), unless the Secretary determines that the amount is 
unreasonable in light of the Board's duties and powers under this Act.

SEC. 7. ENABLING AUTHORITY.

(a) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this Act.
(b) Financing.--
(1) Fund account.--The Federal Reserve Bank of New York 
shall establish a new account on behalf of the Secretary, 
called the ``Treasury Electronic Currency Innovation Fund 
Account'' (in this section referred to as the ``Fund 
Account'').
(2) Use of fund account.--The Secretary shall effectuate 
any and all spending under this Act by drawing an overdraft on 
the Fund Account, which shall be accommodated and facilitated 
automatically, on an indefinite basis, and without the 
imposition of any interest charge or other form of maintenance 
or overdraft fees by the Federal Reserve Bank of New York and 
the Board of Governors of the Federal Reserve System.
(3) Overdraft treatment.--The Fund Account shall be exempt 
from any overdraft prohibitions that currently apply to other 
accounts administered on behalf of the Department of the 
Treasury Department by the Federal Reserve System or a Federal 
reserve bank, and any overdraft liability incurred by the 
Department of the Treasury shall not be included in 
calculations of public debt subject to limit under section 3101 
of title 31, United States Code.
(4) Treatment of losses.--The Federal Reserve Bank of New 
York shall record any losses incurred as a result of spending 
undertaken on behalf of the Secretary from the Fund Account as 
a deferred asset (as described in section 11.96 of the 
Financial Accounting Manual for Federal Reserve Banks, as in 
effect on the date of the enactment of this Act) and shall be 
excluded from calculations of the net operating position or 
consolidated balance sheet of the Federal Reserve Bank of New 
York or the Federal Reserve System, so as to not reduce or 
impact the calculation of total income or revenue generated by 
the Federal Reserve System, or otherwise reduce the total 
amount of net operating profits to be made available for 
remittance to the Treasury on an ongoing basis.
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